Surge in tech hubs give African startups a place to grow

Africa's largest coworking space and incubator has just opened.

When Startup Garage Nairobi opened its doors last month in the Kenyan capital, it became the latest such facility to launch in Africa. According to the crowdsourced BongoHive's "Hubs in Africa" map, there are 45 tech hubs, tech labs, business incubators and hacker spaces on the continent.

Although the Innovation Hub in Pretoria, South Africa opened in 2002 and the Botswana Innovation Hub opened in Gabarone, Botswana in 2006, the overwhelming majority of Africa's hubs have launched since 2010. Why this surge in hacking and the commensurate creation of support facilities for them? It's time.

Africa is experiencing a perfect storm of young people, maturing education systems, and growing mobile phone services and use. A few noteworthy achievements, including Safaricom's M-Pesa mobile payment service, have attracted the attention of investors, both inside the continent and outside.

Startup Garage Nairobi embodies this trend.

Run by Kresten Buch, a Dane who made his initial nut from sports and betting-based software, the Garage is a product of business accelerator 88mph and entrepreneurial social platform, HumanIPO. HumanIPO has run IPO48, a hackathon (with investment as the prize), first in Prague, then, twice so far, in Kenya.

"The Startup Garage was the next step to make," Buch told Ars, "to bring together the African startups, to create an environment for innovation and discussion, where everybody else is also starting their own company, which can be very hard when launching a startup."

The Garage offers 180 working spaces, connectivity, conference rooms, and so on. Most of these spaces go toward either individuals and businesses invested in by the Garage's partners, or, as Buch said, "for companies and people that we think can make the space stronger for the startups."

People working in Startup Garage Nairobi

Curt Hopkins

The focus is on investment. One of the Garage's goals is to provide a space, both literal and figurative, to which outside investors with an interest in, or a curiosity about Africa can come and see what's being done.

"The ecosystem will for sure benefit from outside business angels in tech," said Buch, "because, as they better understand the space, they are willing to invest early and are able to help the entrepreneurs much better than investors with no [startup] experience. The mobile Web is a very new opportunity in Africa, and Africa, of course, doesn't have these types of investors, so getting them to come here [from abroad] will be of great benefit for an ecosystem that lacks experienced investors. So we welcome outside angels to come and look at our startups here or join our seed fund."

Some geeks from Africa, however, take issue with Buch’s assessment of the continent's tech picture. To some it smacks of colonialism, with tech boom carpetbaggers descending on the continent. Wired’s article, "Want to Become an internet billionaire? Move to Africa,” cross-published from men’s magazine GQ, evoked a great deal of contempt in the African tech community. Forbes echoed the story in its post, "Africa Could Make You an Internet Billionaire," saying, “More than ever before, this is the best time for venture capitalists and Y Combinator-type incubators to set up shop in Africa, scout for internet deals and invest in budding African internet companies that’ll lead the future.”

Many saw these articles as a return to colonial resource-extraction propaganda, but this time the resource was not bauxite or diamonds, it was them.

“I honestly think Kersten is only capitalizing on the need for extra hub space in Nairobi,” one member of the Nairobi tech community familiar with both the African tech ecosystem and Buch’s efforts told Ars. “It’s not really an intentional effort to contribute to the advancement of tech in Africa. I'm also not convinced you can build a team and a startup in 48 hours. I think that model seriously needs to be revisited. Perhaps peg a six-month program to the winning ideas and incubate them. Kersten is a cool dude but also smart. I think the whole idea is to try and get first dibs on startups in the region.”

Many of the burgeoning tech hubs in Africa have outside funding or were a result of the interest of those from outside the area. That is not detrimental in and of itself. But there is a danger of underestimating an entire continent. Again. Of creating the economic equivalent to the Kony 2012 campaign—the idea that the place is inherently a mess and needs the guidance of sensible, pale gentlemen in hard shoes.

Leveraging investment from abroad is no bad thing if it serves the interests of the community that produces the wealth in the first place, as well as those who are risking their money. A case can be made that outfits like Startup Garage Nairobi serve the African ecosystem. But anyone in the Garage’s position, it seems, must make certain that the local geeks, whose brains and hands power the profit-making machinery, also benefit from it proportionally, that they keep as much control over their companies and IP as entrepreneurs in the West do. (Though that in itself can fall between “not much” and “too little.”)

The instant an outside investor believes these techies are “resources” to extract, their utility ends. The instance African startups relax their insistence on guiding their own futures, someone else will step in to do it for them.

What's necessary is some kind of mentorship regarding the investment process (foreign or domestic, doesn't matter). Startups in Africa shouldn't wind up like many startups here in Utah--selling 80% of their company for 6 months' salary for 3 people, and the founders being _personally_ liable for the repayment of some or all of the original investment later. As long as the terms make sense for all parties involved, outside investment in actual African-run companies can only be a good thing, right?

Any attempt to introduce capitalism or civilization into Africa will result in an abject failure. Only three places in the world evolved civilization: Europe, the Middle East, and East Asia. Look at how descendants of slaves behave now in the US and in Europe, wild, unrestrained, and utterly uncivilized compared to immigrants from other parts of the world that developed civilization.

Any attempt to introduce capitalism or civilization into Africa will result in an abject failure. Only three places in the world evolved civilization: Europe, the Middle East, and East Asia. Look at how descendants of slaves behave now in the US and in Europe, wild, unrestrained, and utterly uncivilized compared to immigrants from other parts of the world that developed civilization.

Any attempt to introduce capitalism or civilization into Africa will result in an abject failure. Only three places in the world evolved civilization: Europe, the Middle East, and East Asia. Look at how descendants of slaves behave now in the US and in Europe, wild, unrestrained, and utterly uncivilized compared to immigrants from other parts of the world that developed civilization.

Oh dear God. Really this from someone on Arstechnica? I thought most people here were smarter than this.

I spent a month last year in Ethiopia training teachers how to use computers in the classroom. They were at least as good at learning as any ECDL class I've seen where I live. The technical support guy at the teaching hub had more qualifications than I did, but they were short of computers other than donated ones. I wanted to make a few proxy servers to cache the slow internet connection and to filter some of the sites but network cards were like gold dust. Some of the trainees on the course had programming degrees and Microsoft qualifications, but no materials on which to practice their skills.

They are keen to learn, but I hope it's not some greedy business that swoops in and takes all those skills just to make money for themselves. The people really deserve better, and they were in no way wild and unrestrained, very religious in fact.

Any attempt to introduce capitalism or civilization into Africa will result in an abject failure. Only three places in the world evolved civilization: Europe, the Middle East, and East Asia. Look at how descendants of slaves behave now in the US and in Europe, wild, unrestrained, and utterly uncivilized compared to immigrants from other parts of the world that developed civilization.

How civilized: Slavery, imperialism, genocides, gulags. Nazism, Fascism, Communism. All topped off with weapons powerful enough to bleach the outline of your shadow onto concrete the millisecond before you vaporize.

Any attempt to introduce capitalism or civilization into Africa will result in an abject failure. Only three places in the world evolved civilization: Europe, the Middle East, and East Asia. Look at how descendants of slaves behave now in the US and in Europe, wild, unrestrained, and utterly uncivilized compared to immigrants from other parts of the world that developed civilization.

Oh dear God. Really this from someone on Arstechnica? I thought most people here were smarter than this.

I spent a month last year in Ethiopia training teachers how to use computers in the classroom. They were at least as good at learning as any ECDL class I've seen where I live. The technical support guy at the teaching hub had more qualifications than I did, but they were short of computers other than donated ones. I wanted to make a few proxy servers to cache the slow internet connection and to filter some of the sites but network cards were like gold dust. Some of the trainees on the course had programming degrees and Microsoft qualifications, but no materials on which to practice their skills.

They are keen to learn, but I hope it's not some greedy business that swoops in and takes all those skills just to make money for themselves. The people really deserve better, and they were in no way wild and unrestrained, very religious in fact.

All the better for EU and US telcos to offer peering rates and new $$$$ telco services.All the better for the NSA to get in via a few optical links vs many older copper and sat connections.Telco tech will just follow gems, rubber, timber, mines, hydro, faith, roads, farms as another drop in suck out investment dream.Africa needed its own telco deal, sats, optical - so they could peer without looping out just to get back into Africa again.

Any attempt to introduce capitalism or civilization into Africa will result in an abject failure. Only three places in the world evolved civilization: Europe, the Middle East, and East Asia. Look at how descendants of slaves behave now in the US and in Europe, wild, unrestrained, and utterly uncivilized compared to immigrants from other parts of the world that developed civilization.

I fail to see how my posting is trolling. All I am is offering a different and arguably more granular perspective based off science and reason than kneejerk PC cultural marxism.

First, I feel responding to posts like this is necessary because, although you are blatantly offensive and you recognize it as such and take no pains to hide it, you couch your language in terminology associated with scientific conclusions that have long been proven to be simplified to an unacceptable extent. You should be able to say these sorts of things so that the rest of the world can explain to you in calm English why your statement is hideously wrong.

Secondly, the origins of capitalism and 'civilization' (although that is a loaded term) as centered in Europe, the Middle East and Asia is a far more complicated interaction that merely the growth of societal forces as a function of innate intelligence. The popular book "Guns, Germs, and Steel" does a decent enough job of explaining why these cultures arose and why similar cultures failed to fully develop in lands such as equatorial Africa or Polynesia.

Thirdly, there are decent arguments to be made that prolonged slavery has the effect of dulling the collective intelligence of the culture affected but even that pales in comparison to the effects of systemic retardation such as ghettoization (deliberate and otherwise) that took place since the Civil War or the destruction of the black middle class after 1950 due to the effects of manufacturing restructuring. Moreover, the recent trend known as the reverse Flynn effect would seem to indicate the 'civilized' places of the world are growing intellectually stagnant and that the rest of the world is well on its way to catching up.

Fourthly, the location of money and industry in Western Europe, North America and far more recently in East Asia is not due to any vast disparity in intelligence or culture but merely to the extrapolation, over several centuries, of small environmental advantages. Industrial and monetary collocation is a well-established and predicted trend from as early as the 1830s with the Thunen production zones and Hotelling's Law/Rule. The world was not as asymmetrically aligned in 1800 as it became.

Lastly, the recent growth of the East Asian markets is not due to the relative strengths of the culture as compared to that of the African but, rather, the centrality of governmental power in the unified Asian national system made industrial reinvestment far more likely. Growth in manufacturing would follow the Kaldorian model of exponential returns. While Asia was busy after WWII investing in its industrial infrastructure, Africa was still reeling from the post-colonial power vacuum, a state that has still not quite settled across the continent.

In conclusion, to find "wild, unrestrained and utterly uncivilized" cultures to demonize, you need not look to those of different ancestry. I can find disgusting behavior like that at any time in the "college town" of my local state university, at the shore nearby (yes, this would be the Jersey shore), or in any number of a multitude of other areas all over this country. You can continue voicing your opinions anywhere you want in any way you want. However, you should expect that those incapable of assembling a point-by-point refutation of your flawed premises will still be outraged at the offensive implications of your remarks.

Did an investment study in the HVAC industry in Ghana, which turns out to be a real star. Great place to do bread and butter business. Not just high-tech, but light manufacturing is attractive, too. Africa is coming into its own, and I am so happy to see it.

There is a fine line between direct involvement (eg. investing in local companies, starting an incubator, etc) and colonialism.

Even if the deal is fair, capitalism is still about people with money (in that case, non-black people) making more money thanks to other people's work (in that case, black people). Given the historical baggage of the continent, I can see how this could seems exploitative and unethical.

I think an involvement is a much better way: by developing Open Hardware and FOSS, you allow local entrepreneurs everywhere in the Wold to access interesting technologies they can learn from, modify, improve, adapt to a local context, and base local business on.

PS. we should really stop using the Mercator projection, it makes Africa seems way smaller that in really is. That continent is absolutely gigantic.

There is a fine line between direct involvement (eg. investing in local companies, starting an incubator, etc) and colonialism.

Even if the deal is fair, capitalism is still about people with money (in that case, non-black people) making more money thanks to other people's work (in that case, black people). Given the historical baggage of the continent, I can see how this could seems exploitative and unethical

Eh. I think providing work to people who are skilled, talented, or promising and making some money off of them, so long as it is mutually beneficial and not abusive, is the best way to aid a developing economy. I don't see this as colonialism; I think the primary difference is that in colonialism you are extracting natural resources, then selling back finished goods to your captive market. In beneficial capitalism, you impart human capital (training), money, and in return for work; most of which directly creates finished products. I don't think it's possible to have technological colonialism; because there simply aren't any intermediate goods in an information product.

WaggishWombat wrote:

I think an involvement is a much better way: by developing Open Hardware and FOSS, you allow local entrepreneurs everywhere in the Wold to access interesting technologies they can learn from, modify, improve, adapt to a local context, and base local business on.

I think this a generally a good idea. FOSS benefits everyone.However, there is a certain threshold below which FOSS and Open Hardware aren't useful to developing countries. Persons need training on computers and the Internet, for instance (and they also need access to a computer and Internet). For Open Hardware, you need to have had training on PCB's, have a means for their manufacture, have had training on circuit design software, training on circuits, etc. You probably need to be able to read English, because most FOSS documentation is only available in English, and in English that most native readers would have slight difficulties with. Now, a lot of this can be self-learned; but there are huge barriers to FOSS in developing countries that must be overcome for it to be universally useful.

Not just high-tech, but light manufacturing is attractive, too. Africa is coming into its own, and I am so happy to see it.

I always figured that Africa would have this process happen eventually. When I learnt about globalism, it was really confusing that Africa was mostly excluded.

I think at this point, parts of Africa are what South Asia was in about 1960~1970 or so: a massive opportunity. If your company is large, does primarily manufacturing, and isn't moving into Africa, they should be doing so post haste.

As China begins to falter from their population problems, most consumer goods will be manufactured in Africa. There is going to be massive amounts of cheap labor available in Africa; labor that will be far cheaper than labor anyplace else. We unfortunately will probably see some abuses of this (sweatshops), but by 2050 or 2060 (at absolute latest) I imagine Africa will be the workplace of the world. This is assuming political instability and tyrants don't derail economic growth, however. There are going to be massive cultural tensions as this process takes place. I am hopeful all of these tensions can be resolved.

And then we will have a nearly fully industrialized world. YMMV on if that is a good thing or not, but Africa moving forward certainly is.

Viewing this as colonialism is slightly misplaced: colonial exploitation means the removal of resources, and in this case (as ever with high tech) the resources are not the ideas and software, the resources are people, who stay in Africa, and will one day learn everything they need about running a high tech company from the foreigners, quit their Western job, and start their own company. Foreign investors will create the expertise, but it stays in Africa. Look no further than China for an example of how this works.

Viewing this as colonialism is slightly misplaced: colonial exploitation means the removal of resources, and in this case (as ever with high tech) the resources are not the ideas and software, the resources are people, who stay in Africa, and will one day learn everything they need about running a high tech company from the foreigners, quit their Western job, and start their own company. Foreign investors will create the expertise, but it stays in Africa. Look no further than China for an example of how this works.

More than China, look at Japan since 1945, Germany from ~1860 to 1930, the US itself from ~1830 until 1970 and Britain from 1780 till 1900. Within each period, foreign investment in local manufacturing enterprises led to the growth of local expertise. This effect was heightened by local government maintaining control over the size and types of investment to ensure the breadth of its effects through tariffs and restrictions over the transnational investments the companies wanted to do.

But not understanding how locals, after being exploited in every way possible for centuries, could see that as some "light" form of colonialism, seems to indicate a general lack of empathy. Put you in the shoes of the other guy (or gal), really. Really.

But not understanding how locals, after being exploited in every way possible for centuries, could see that as some "light" form of colonialism, seems to indicate a general lack of empathy. Put you in the shoes of the other guy (or gal), really. Really.

Of course, I can see how anyone from Africa would understandably be wary of this, and I also have no doubt there will be cases of outright exploitation. But I think it's a positive trend in the long run.

@Curt. I think it is bad style to publish comments personal remarks about people with out quoting their name. I can't see who I'm debating here.

In regards to the 'ghost' that doesn't believe you can build a startup in 48 hours, I agree. Building a real company takes a long time - also much longer than 6 month. The interesting thing is whether you can evaluate talent in 48h. A lot of employers are doing less due diligence to hire staff than we do when picking people to invest in. Startup garage is meant to support the talent/startups we find from these event plus the startups we will invest in going forward.

In regards to exploitation of the entrepreneurs by foreign investors debate: the 'ghost' needs to read some other books on economics besides Marx, 'Das kapital'. In Silicon Vally, the entrepreneurs get the best valuations in the world, much better then in Europa. Why? Because of massive competition from VC's and Angle investors.

So, the more investors that are here in Africa investing - no matter where they come from - the more competition there will be and the better deals startups will get. If investors are non-existing here, then entrepreneurs will go where the investors are to get the best deals. That is why so many scandinavien entrepreneurs leave Europa to go to the US. The outcome of that will be less local jobs and brain drain and even more important less future local angle investors. I have personally many examples of that from both Denmark and Estonia - the best people leave.

Don't misunderstand me, we of course do these things because we think that there is an great opportunity to make great things in Africa and make money on doing it. We are not in the charity business. But more investors coming is good for local entrepreneurship and even if you as a startup have a preference for local investors, then outside investors will only help drive up the valuation of your startup.

In regards to the comment “It’s not really an intentional effort to contribute to the advancement of tech in Africa' . 88mph is an investment company. We have in 7 month invested in 7 very early stage companies. The companies in total now employ 60 people. One company have raised a series A and are now rolling out into Nigeria, Uganda and will employ 50-80 people in the next 12-18 month. We are not a research institution if that is what you mean, we want to create pan African tech companies that create solution for local people using technology.

Comparing mass murdering state imperialism with tech seed investing in so far out that it needs a comment.

There is not even a remotely fine line between capitalism and colonialism, unless one don't understand the origin of the words.

Colonialism is a state activity backed up by guns and the use of physical force. Capitalism builds on voluntary exchange among free people. i will agree with you that this capitalism is not what the developed countries have. what they have is corporatism. here bigger corporation use the state to limit competition among other things by raising the barrier to entry for entrepreneurs by for instance lobbying.

We have invested in 7 African tech companies, we are minority shareholders with means if the business succeed the entrepreneurs will make more money then we will. The agreement we made with the entrepreneurs was voluntary. there guys are smart. It's not like it's the ones that can't go out and find a job if they didn't take the investment. Please explain the exploitative and unethical element of this activity? And I would like to invite you to our office and speak to them directly on how they are getting exploited.

Curt Hopkins / Curt writes for Ars Technica about the intersection of culture and technology, including the democratization of information, spaceships, robots, the theatre, archaeology, achives and free speech.